Red Flag Deviation Exceptions" href="http://www.camsbycbs.com/wordpress/?p=273" rel="bookmark"> Red Flag Deviation Exceptions

With the latest CAMS-ii software release (version 3.1.0), which installed during the week of June 8, 2009, CBS completed a process to aid credit unions using CAMS-ii in the detection of possible fraudulent activity on members’ accounts. This detection process originally started back in mid-year 2008.

This process helps your credit union comply with the final rules on Identity Theft Red Flags and Address Discrepancies implementing section 114 of the Fair and Accurate Credit Transactions Act of 2003 (FACT Act), 15 U.S.C. § 1681m, and section 315 of the FACT Act, 15 U.S.C. § 1681c, that amended the Fair Credit Reporting Act (FCRA).

With the final CAMS-ii software release in 2008, CBS started gathering member activity on a daily basis for thirteen transaction categories (cash in, cash out, checks in, checks out, ACH in, ACH out, Wire in, Wire out, ATM in, ATM out, POS, Service Center in and Service Center out). This information is captured on a daily basis and summarized by member for a monthly activity pattern.

The version 3.1.0 CAMS-ii software uses the transaction activity information gathered since January 1, 2009 through May 31, 2009 and calculates a probable monthly activity pattern for each member. This information is saved on the member's personal data record. At each end-of day batch processing session, each member’s monthly activity (as gathered daily) is compared to the member's probable monthly activity pattern and registers a Red Flag exception if the variance is greater than a specified percentage as governed by a CAMS-ii Control – Master parameter.

All Red Flag exceptions should be reviewed and appropriate actions taken. Probable actions might be to adjust the member's monthly activity pattern estimated value and/or to begin investigating for potential fraudulent activity.

Since the version 3.1.0 CAMS-ii software has been installed, CBS has had several credit unions contact us concerning the volume of the Red Flag exceptions. We have determined that while five months of activity did provide a good starting point for the estimations of the majority, the initial exceptions generated may include significant false hits. Some of the reasons for the false hits are because of no member activity in the first five months of 2009 for some of the following category examples:

· Member does an ATM withdrawal
· Member has an ACH debit for insurance that only happens once a year
· Member does a cash deposit
· Member does a cash withdrawal
· Member opens a loan and receives a check for the proceeds, etc.

To help you with the volume of Red Flag exceptions and ease into this process, we are making some program changes to give you more control. Over the weekend of June 13, 2009, we will be installing an update to give you more specific control over which particular member activity exceptions you want to track.

Each of the thirteen categories will have a separate percentage parameter in the Control-Master Parameters (Back Office > Standard > Parameters > Control-Master). Setting the percentage value to 9999 will cause the CAMS-ii software to ignore that category. For example, to track only exceptions for ACH In and ACH Out, leave all of the other categories set to 9999 and put a reasonable deviation percent for only the ACH In and ACH Out parameters. The weekend update will set all the categories to 9999; therefore, you must make changes to the Control-Master settings to activate the specific categories that you want to track.

Please address any questions regarding this message to the CBS Issue Tracking System.